Monthly Archives: December 2013

I am behind on car payments but don’t want to lose my car, can bankruptcy stop repossession and let me catch up?

Yes to stopping repo and maybe to catching up.

Bankruptcy will stop the repossession in the short term, but catching up is another matter.

If you file a chapter 7, you can choose to reaffirm the car loan, but most lenders will require that you catch up on payments in the first 2 or 3 months of the bankruptcy before they let you reaffirm the debt.

I am dying of cancer? What should I do? Should I file bankruptcy now to stop the creditor calls?

I hate this question. I get asked this very question about twice a year, and it’s morbid and depressing. However, I understand that I am being asked the question for answers about numbers and timing, not for comfort and support.
First, let me say that I do sympathize and I feel awful for you.
Okay, now on to the numbers:
If we file a chapter 7 today, we can wipe out the medical debts in full and stop the collection calls, until your next round of treatments. Then, new bills arise and new collectors come after you. You cannot file a new chapter 7 again for 8 years if you received a discharge of your debts in the 7 we just filed.
If we file a 13, we can pay a small amount (like $100 a month) towards our creditors and it stops the collection calls. If you get a new batch of medical bills, we can let the 13 dismiss (chapter 13’s run for 5 years), and then we can file a new one and add the new creditors.

What would be perfect is to simply wait. Tell creditors the situation, and then don’t file any bankruptcy until the last minute, adding in all of the creditors after all of the bills have come in. Unfortunately, most people don’t want the added stress of collection calls every day while going through their treatments.
So, in short, we probably file a 13 for now.

My credit union says that I have to pay off my credit card to keep my financed truck, is this true?

Yes. Unfortunately it is.

cross collateral 1Generally, credit unions in Utah will cross-collateralize their loans. This means that your truck isn’t just collateral for the loan against it, it is also collateral for your overdraft and your VISA card, and the other credit accounts you have at the bank.
So, if you make a payment towards your truck, they may not even credit the payment towards that loan; the money may be applied to the account which is most delinquent.
If we file a Chapter 7 bankruptcy and want to keep the truck, we’ll have to reaffirm on that loan, as well as every other loan with the credit union.


********Editor’s note:

I have a foreclosure sale tomorrow. Can filing bankruptcy stop it?

Yes. Even better, we can propose a way to keep the house.
Let’s say you were out of work for the last 6 months and feel behind 6 payments on the mortgage. Now you’re working again. We can file a chapter 13 and propose a plan to the court to catch up on those missed payments. If you’re 6 months behind on a $2,000 a month mortgage, then you’re 6×12 = $12,000 behind. We would then propose a chapter 13 where you pay $200 a month to the bankruptcy trustee over the next 60 months to catch upon that $12,000 you were behind.
Now if the foreclosure sale is tomorrow, so long as you file bankruptcy before the sale takes place, the bankruptcy will stop it.
The moment you file bankruptcy, the court (federal Bankruptcy Court for the District of Utah) imposes something called the “automatic stay” which stays (stops) collection activities, including foreclosure, garnishment, and repossession.
Even if the mortgage company doesn’t know that you filed bankruptcy and still conducts the sale, you win. Bankruptcy trumps foreclosure, and if the bankruptcy was filed first, then the foreclosure sale was not valid.

This is not legal advice. If you need help, call 801-980-1313 or go to

Am I going to lose my toys (4 wheelers and dirt bikes) if I file bankruptcy?

Yes. Maybe.
If you file a chapter 7 and owe more than they are worth, then you can reaffirm the debt and keep them. The trustee doesn’t want them because they have no value.
If you file a chapter 7 and own them free and clear, then the trustee will sell them off to pay creditors. That means that I will usually advise you to sell them off prior to going bankrupt and then spend the money on exempt items, like food storage, clothing, and attorney’s fees (I don’t mind getting paid).
If you file a chapter 13, it’s more complicated.
If you own them free and clear, then you’ll have to pay their value into your plan. In other words, if you have $3,000 of toys, the chapter 13 trustee will run a liquidation analysis and will require that we pay a pot of at least $3,000 to our unsecured creditors.
If you owe money on them, it’s awful. If you try to keep them, you’ll have to pay the loans on them and pay double that amount to your unsecured creditors. So, if your payment on the loans is $150 a month, then the trustee will require that you pay the $150 a month to the secured toy creditors, and you’ll have to pay another $150 a month into the pool of money for unsecured creditors.
If you want to give them up, then you simply surrender them in the bankruptcy.
This is not legal advice. If you need legal help, call 801-980-1313

I missed my 341 Meeting of Creditors? Will my case be dismissed?

It just might.
It depends on the reason. Normally, you file the bankruptcy case and receive a case number. About a week later, you will receive the court’s Notice of Meeting of Creditors and Appointment of Trustee, which gives you the date of the 341 meeting, about 30 days later. In other words, you have a month to readjust your schedule to make sure that you can attend the meeting.
But sometimes, life happens. I had clients today who had just taken their son to urgent care because his flu had taken a bad turn and his lungs sounded raspy. I told them to skip the 341 Meeting.
The trustee will now file a Motion to Dismiss, and I’ll have to file an Objection to Motion to Dismiss and a Motion to Reschedule 341 Meeting of Creditors. I’ll list the reason for missing the meeting, and if the reason is good enough, then the court will not dismiss the case.